The State of the European Energy Union

July 10, 2018

“In an increasingly open and interconnected market, one of the most vital elements of the European Union (EU) common market project is lagging behind: energy. The European Energy Union is an ongoing project of the EU to create an open and interconnected energy market throughout the EU providing secure, affordable and climate-friendly energy.”

In an increasingly open and interconnected market, one of the most vital elements of the European Union (EU) common market project is lagging behind: energy. The European Energy Union is an ongoing project of the EU to create an open and interconnected energy market throughout the EU providing secure, affordable and climate-friendly energy. The initiative was launched in 2014 and published its last progress report in November 2017 [1]. These reports monitor the advancement of the EU towards its 2020 and 2030 energy and climate targets. The reports repeatedly draw the same unsatisfactory conclusion: more work will be needed. So, what exactly is going wrong?

The road towards this Energy Union is outlined in a framework, and can be roughly divided into four pillars: (1) more interconnection, (2) higher energy efficiency, (3) higher share of renewable energy and (4) cuts in greenhouse gas emissions. Some countries, however, are struggling more with their targets than others.

As per the 2014 numbers of Eurostat, nine member states have already met their national renewable energy targets for 2020. The states that are the furthest away from reaching their targets are France, the Netherlands and Ireland [2]. Ironically, these are countries with relatively high GDP per capita within the EU. Irish officials argue that their progress towards the targets were hampered by slow recovery following the financial crisis. Ireland was however not disproportionately affected by the financial crisis; it was a truly global crisis [3].

A possible explanation is that the four countries were not politically equipped to surpass the tragedy-of-the-commons problem. Renewable energy is a typical good that everyone wants but nobody wants to pay for. In the Netherlands, even after a sharp increase in ‘green’ voters during the 2017 election, the new government coalition agreement was exceptionally weak from an environmental perspective. The French system, on the other hand, is infamous for its layered bureaucracy with high amounts of red-tape. This system, in addition to a well-organized fossil fuel lobby are severely hindering the development of a green energy sector [4].

On a more positive note, the EU is expected to surpass their goals in cutting greenhouse gas (GHG) emissions by 1%. Even though this goal does not include ‘embedded emissions’: GHG emissions involved in the production of imported goods [5], it is still a hard-needed win for the EU in the realisation of their 2020 goals.

Another area where progress is being steadily observed is that of energy efficiency. Per capita energy consumption in the EU has decreased from 2007 to 2014. Yet, 2015 and 2016 witnessed small increases, likely due to cooler winters. This resulted in the repetition of the EU Energy mantra: “additional efforts may be needed.” Despite these cooler winters, the EU is the first economic bloc to decouple economic growth from energy consumption.

Finally, the EU has a range of projects on their way to increase energy interconnection. These projects, however, are facing their own geopolitical issues. To conclude, the EU has set out a structured path towards the creation of its Energy Union, but along the way it has had to face multiple political—and meteorological—realities. Most of the 2020 goals are legally binding targets, resulting in possibly hefty fines for the countries that fail to meet their targets. Yet it is doubtful that the European Court of Justice will accept a cold winter as a justification for a breach, but imposing fines when the EU is suffering from low levels of support might prove a politically risky move. All in all, 2020 will prove to be an interesting year, not just for the Energy Union, but for the wider European Union as well.